The growth rate of steel demand will slow down in 2020

In 2019, under the combined effect of policy guidance and market expectations, the steel industry will launch a new round of capacity replacement. Constantly increase investment in ultra-low emission transformation and environmental protection compliance projects, so the industry's fixed asset growth rate continues to remain high.

The total steel demand has maintained a relatively strong growth in 2019. According to data from the China Iron and Steel Association, China's total steel demand in 2019 is about 875 million tons, a year-on-year increase of 6%.

According to data from the General Administration of Customs, from January to December 2019, China's cumulative exports of steel materials were 64.293 million tons, a year-on-year decrease of 7.3%; the cumulative export value was US $ 53.76 billion, a year-on-year decrease of 11.3%. Cumulative imports of steel were 12.304 million tons, a year-on-year decrease of 6.5%; the cumulative import value was US $ 14.11 billion, a year-on-year decrease of 14.1%.

From January to December 2019, China's import and export products are mainly plate, rod, wire and pipe, with exports accounting for 59.8%, 14.9% and 13.6% respectively; imports accounting for 83.9%, 9.6% and 2.6% respectively. The export regions cover five continents, of which Asia is the main export region, accounting for 70.0%, and other regions are between 4-10%; imports are mainly concentrated in Asia and Europe, accounting for 90.1% and 9.1% respectively.

From January to December, China's cumulative import of iron ore was 1.07 billion tons, an increase of 0.5% year-on-year, and the import value was 101.46 billion US dollars, an increase of 26.64 billion US dollars, an increase of 33.6%. Compared with last year, while the total amount of imports remained stable, the amount of imports rose sharply, which greatly affected the profits of downstream steel manufacturing.

Although the strip market in 2019 is still okay, looking forward to a longer-term market prospect, China's steel production capacity has entered a stage of reduced development. It is expected that steel demand will increase slightly in 2020, an increase of 2% year-on-year. This lower growth rate is close to the previous forecast by the World Steel Association, which predicted a 1% figure.

In 2020, the growth rate of China's steel demand will slow down, production capacity will be released, and the trend of oversupply will be obvious. At present, the domestic steel production capacity is at the peak of release, mainly because the steel industry is in a new round of adjustment under the influence of the "de-capacity" policy in the past few years.(Source: China Report Hall)

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